RBA has room to cut rates: Bowen

Federal Treasurer Chris Bowen insists low interest rates are supporting the economy but believes the central bank has "considerable room" to make further reductions should they be needed.

The Reserve Bank of Australia (RBA) left the cash rate at an all-time low of 2.75 per cent for a second month at Tuesday's monthly board meeting.

It noted the Australian dollar still remains high, despite depreciating about 10 per cent since early April.

"It is possible that the exchange rate will depreciate further over time, which would help to foster a rebalancing of growth in the economy," RBA governor Glenn Stevens said in statement.

Otherwise, the board decided policy remained appropriate for now.

"The board also judged that the inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand," Mr Stevens said.

Business groups were disappointed the RBA didn't cut when the economy is transiting from the mining investment boom to broader based growth.

In his first media conference as treasurer, Mr Bowen said large parts of the economy would benefit from the dollar's fall, noting an improvement in manufacturing data on Monday as an early indication the contraction in the sector "may be drawing to an end".

He also felt the central bank should resist taking a back seat while the federal election looms.

"The Reserve Bank should exercise its independence and make the decisions it feels are in the best interests of the economy, regardless of any political cycles," he told reporters in Sydney.

Financial markets are factoring in at least one more rate reduction this year.

Meanwhile, Prime Minister Kevin Rudd talked to the Business Council of Australia, following up on a commitment to rebuild bridges with the business community.

Its president, Tony Shepherd, described the meeting as "constructive" and said a range of topics were canvassed.

"The prime minister is keenly aware of the nation's economic challenges, and the need for government to work more closely and cooperatively with business to address it," Mr Shepherd said in a statement.

Last week, Mr Shepherd called for the carbon price to be lowered to the international level, a withdrawal of "damaging" amendments to skilled worker temporary 457 visa laws and the Fair Work Act, and for the repeal of other business-related legislation.

So far only the BCA has had a formal meeting, although Council of Small Business of Australia executive director Peter Strong said he was due to talk with Mr Bowen on Thursday.

He was "surprised" not to be involved in Tuesday's discussion

"We were very disappointed because with Julia Gillard we know we would have been consulted," Mr Strong told ABC radio.

He said when the former prime minister came to power she embraced small business in a way that Labor hadn't been done before, and provided the council with a seat at many forums.

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